Low 4G uptake: Every telco wants a piece of the 4G market, but where’s the cake?

It is fairly well-known and well-accepted that the uptake of 4G LTE services launched by various telecom providers like Bharti Airtel, Idea Cellular, and Vodafone India is not impressive at all. While it is too early to pass the verdict, it is likely to be an area of concern for Reliance Jio as well. The low uptake will definitely be giving sleepless nights to the senior management of the company. Mukesh Ambani-led Reliance Jio has already invested more than Rs. 75,000 crore in setting up the state-of-the-art network.

Mobile broadband is growing for most of the telcos, but the same cannot be said about 3G and 4G networks. There is a dichotomy here. There is not an iota of doubt that there is a strong demand for mobile network, so what’s the reason that the uptake of 3G and 4G isn’t enough? There are various reasons, and the most important reason is that 3G never really took off. No, no it is not as confusing as it sounds. In the consumer perception, they want to wait and watch before opting for a 4G device and SIM.

Remember that consumers were promised high speeds and better mobile broadband quality with the launch of 3G? Instead, what they received were inflated bills. This time around, they don’t want to take a chance till 4G network gets stabilised and till time time telcos put all the nuts and bolts in place. Combine this with the never-ending call drops problem, and customers are not wrong in taking every claim from Indian telcos with a pinch of salt. Furthermore, a consumer thinks in terms of bill amount. In their mind, more the speed, more the consumption, which indirectly leads to high bill amounts. Thus, the reluctance to adopt 4G services.

The second issue is the problem with 4G LTE compatible devices. Consumers aren’t sure whether they should go for a 4G device or a VoLTE device, and whether a 4G device could be used for VoLTE and vice versa. There is little doubt that this confusion is hampering the growth of the 4G ecosystem. These factors are impacting all the telcos, but most of the effect of this problem would land on Reliance Jio, which is putting all its eggs into its 4G basket. If the uptake is low, the return on investment is going to take a very long time. Incumbents still have 2G and 3G networks, but that is not true for Reliance Jio.

However, at the same time, the enterprise segment might be the saviour to both, incumbents as well as Reliance Jio. These service providers are aggressively targeting the enterprise segment and this segment opts for the latest technology. The enterprise space is growing with small and medium enterprises moving towards the adoption of cloud services as well as things like IoT. The contribution of this segment will grow significantly for the Indian service providers and will be a focus. The end-consumer adoption of 4G services is still some time away. The telcos would do well to focus on network upgradation so they can truly offer what they promise.

Very interesting discussion going on here. Let me add my 2 cents here. Until now Airtel used to talk about it’s Minutes Factory & how efficiently they run it. Over the last year or so, the growth in Number of Minutes consumed has been slowing. Now they would start talking about the MBs Factory. In the Dec’15 quarter, Airtel alone carried 133 million GBs of Data traffic on it’s 2G/3G/4G networks. Assuming that Airtel holds a market share of around 20-25%, Indians consumed somewhere around 500 to 700 million GBs during the Dec’15 quarter alone. Even when the Average Data… Read more »